REPUBLIC OF TÜRKIYE

The Republic of Türkiye is a presidential republic. Legislative power is vested in the Turkish Grand National Assembly, which comprises 600 deputies directly elected every five years through a system of proportional representation based on political parties. The head of state is the president, elected by direct suffrage for five-year terms. This system has been in place since 2014, as a result of the 2007 referendum transferring to the people the parliament’s former prerogative of electing the president. The 2017 major constitutional reform deepened the political transition from a parliamentary representative system to an executive presidential system. As of 2018, the powers of the Assembly were reduced, the role of the prime minister was abolished, and all executive authority was transferred to the president, including appointing a cabinet, regulating ministries, drafting the budget, etc.

According to Article 123 of the Constitution, the Turkish administration is built upon the principles of both centralisation and decentralisation. It means that Türkiye’s administration has a unitary character: in terms of organisation and functions, central government bodies and decentralised entities form a whole. As a result, Türkiye’s administration at the territorial level is based on both deconcentrated administrations and decentralised governments (subnational governments).

Several waves of reform have significantly modified territorial administration in recent years and provided subnational governments with more powers. Between 2004 and 2005, a package of reforms was enacted, involving the restructuring of subnational governments at all levels, and leading to the establishment in 2005 of self-governing entities at the regional level, namely „Special Provincial Administrations“ (SPA). Between 2008 and 2012, further reforms modified both the provincial and local territorial organisation and the fiscal framework. In particular, amalgamation took place at the municipal level, as the number of “provincial metropolitan municipalities” (PMM) increased to 30, and the SPAs were abolished in those provinces having PMM (Act no. 6360). PMM have a two-layer structure, the metropolitan municipality and its constituent district municipalities. The third phase of the Local Administration Reform (LAR) is on-going since 2019, with the support of the EU and UNDP. It has three components: (i) effective local service delivery; (ii) the new metropolitan municipality model and inclusive local governance; (iii) updating the management information system infrastructure pertaining to the local administration system.

Today, the territorial level is composed of, on one hand, the decentralised administration, based on SPAs, metropolitan cities, municipalities, and villages, and on the other hand, the state deconcentrated administration, based on provinces and districts. Türkiye also has several areas without municipalities but traditional settlements instead. The legal basis for local authorities is provided by the Law on Special Provincial Administration (Law no. 5302), the Law on Municipalities (Law no. 5393, amended in 2018), and the Law on Metropolitan Municipalities (Law no. 5216 of 2004, amended in 2012).

Turkish public administration remains highly centralised. Art. 127 of the Constitution acknowledges the supervision of the central administration over local governments.

Türkiye is a signatory of the European Charter of Local Self-Government, in effect in Türkiye since 1993, even though it has many reservations regarding the Charter. There are one national and several regional local government associations operating in Türkiye. The Union of Municipalities of Türkiye (UMT) and Marmara Municipalities Union (MMU) are the most active local government associations in the country.

TERRITORIAL ORGANISATION
Municipal Level [1]	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
973 provincial and district municipalities (Belediyeler); 387 towns; 30 metropolitan municipalities*		51 special provincial administrations, or SPAs (İl Özelİdareleri); 30 provincial metropolitan municipalities, or PMM*
Average municipal size**: 57 627 inhabitants
1 390		81	1 471

[1] Name and number of sub-municipal entities:
18 211 villages (Köy)
*Nb: Metropolitan municipalities are counted twice, as a municipal-level entity and as regional entity.
**Total population of municipalities was 80 101 564 in 2021.

OVERALL DESCRIPTION : Türkiye has a two-tier local government system comprising provincial administrations and local government. The local administration is organised in three autonomous types of local government which are locally elected: special provincial administrations (SPAs), municipalities and villages. They have financial and administrative independency from central government. Türkiye also comprises 18 211 villages settlements (köy), representing around 7% of the total population.

Turkey is also subdivided into 81 provinces for administrative purpose, and each province is divided into districts, for a total of 973 districts. The administration of the provinces is based on the principle of devolution of powers (Article 126 of the Constitution). The provincial governor is the chief administrative and political officer in the province. The district governor is the chief administrative officer of the district.

PROVINCIAL LEVEL: The decentralised provincial level comprises 51 SPAs as well as 30 PPMs (with a population over 750 000 inhabitants). The deliberative body of the SPAs is the provincial council, composed of members elected by direct universal suffrage for a five-year mandate. It is headed by a president, elected by and from among the members of the council. In addition, each SPA has a provincial executive committee composed of ten members for one year. It has a mixed status, both deconcentrated and decentralised: five members are elected by the provincial council while the five others are appointed by the governor (vali), who is appointed by and represents the central government. In 2021, the average size of provinces was around 1 million inhabitants, ranging from 83 645 inhabitants in the least-populated province (Tunceli) to 15 840 900 inhabitants in the province of İstanbul.

Alongside the 51 SPAs, there are metropolitan municipalities, that first originated in 1984 in the three largest cities (Istanbul, Ankara and Izmir). Two main waves of legislative reforms extended the number of metropolitan municipalities: Act no. 5216 in 2004 and Act no. 6360 in 2012. The 2012 law determined a minimum size of 750 000 people and expanded the boundaries of metropolitan municipalities to their corresponding provincial boundaries in order to cover both urban and rural areas, expanding the number of metropolitan municipalities from 16 to 30. Metropolitan municipalities are governed by metropolitan mayors, elected directly, and have a metropolitan assembly that is not elected, but composed of district mayors and of representatives of district assemblies.

At the regional level, SPAs co-exist alongside provinces, which are deconcentrated state entities managed by governors, appointed by the central government. These governors maintain a major role as the heads of the Executive Committee of SPAs. Deconcentrated provinces are themselves subdivided into districts. Governors are represented by sub-governors in each district of the provinces.

MUNICIPAL LEVEL: The local level comprises four categories of local governments, depending on their size: metropolitan municipalities (see above), 51 provincial municipalities, 922 district municipalities and 387 town municipalities. In municipalities, the deliberative body is the municipal council composed of members elected by direct universal suffrage for a period of five years. The mayor is the executive of the municipality and is elected by direct universal suffrage every five years.

The number of municipal governments has been deacreasing over the past 15 years due to municipal amalgation: In 2008, the Scale Reform Act reduced the number of municipalities from 3 225 to 2 954, and this number was further reduced to 1 394 in 2012. In 2021, the average size of municipalities was large by international comparison (10 254 inhabitants on average in the OECD and 5 959 inhabitants in the EU27 in 2020). Around 5% of municipalities (excluding metropolitan cities) had fewer than 5 000 inhabitants in 2020, while 62% had more than 20 000 inhabitants.

At the sub-municipal level, villages are not fully-functional municipalities because of their small size. They are local self-governments recognised in the Constitution and do not depend on a municipality. They comprise three bodies: village council, council of elders, and village headman – the so-called Muhtar, who is elected every five years by the villagers.

STATE TERRITORIAL ADMINISTRATION: Regions as such do not exist in Türkiye but the government established a national network of 26 Development Agencies based on Law no. 5449 in 2006. They form the NUTS-II level, that has been used as the regional planning unit for preparing regional plans and strategies. Agencies have a participatory approach to encourage public-private dialogue. At the moment, all 26 NUTS-II regions have their own regional development plans prepared by Development Agencies and local stakeholders for the 2014-23 period. These plans are important in tailoring policy and implementation to local needs and circumstances. They also highlight regional situations that may need national-level intervention.

Türkiye has one of the largest regional disparities in terms of GDP per capita across small regions within the OECD, even though disparities have decreased slightly over the last decade between Istanbul, the richest Turkish region, and Eastern Anatolia, which has been catching up. The GDP per capita of the Istanbul region is more than four times higher than the GDP per capita of Southeastern Anatolia. The National Strategy for Regional Development (NSRD 2014-23) was adopted in late 2014 and aims to address regional and rural-urban disparities.

The responsibilities of SPAs, municipalities and metropolitan municipalities are listed respectively in the Special Provincial Administrative Act (Art. 6), the Law on municipalities (Art. 14) and the Law on Metropolitan Municipalities (Art. 7). SPAs are mainly in charge of economic development, land development, agriculture, environmental protection and planning and, to a low degree, health services and social welfare.

The responsibilities of municipalities are divided between mandatory and discretionary service provision responsibilities. Mandatory responsibilities include urban infrastructure facilities, environmental health issues, urban traffic, parks and recreation, housing, social and cultural services, economic development and construction. Metropolitan municipalities have additional responsibilities, such as urban planning, metropolitan transport master plan and disaster management. Basic services in water supply, sewerage, natural gas and transport services may be performed by separate established administrations called affiliated agencies. Compared with other OECD and European countries, Turkish subnational governments have very limited responsibilities in social sectors (i.e. education, health and social protection), which are centralised at the national level, although local governments can also contribute to these functions from their own-source revenue (e.g. school maintenance).

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Provincial level	Municipal level
1. General public services (administration)	Internal administration	Internal administration; Marriage ceremonies
2. Public order and safety	Emergency assistance and rescue	Security forces; Fire brigades; Emergency aid
3. Economic affairs / transports	Industry and trade; Roads; Agriculture (reforestation, irrigation); Tourism	Local roads; City traffic; Tourism
4. Environment protection	Environmental planning and protection; Protection of soil; Prevention of erosion; Sewerage; Solid waste; Supporting forest villages and reforestation; Parks and gardens	Environmental health; Forestry, parks and green areas; Protection of natural resources
5. Housing and community amenities	Water; Land development	Urban infrastructure
6. Health	Health centres; Health posts, mainly in rural areas; Mother and child health and family planning centres; Tuberculosis dispensaries; Hospitals;	Relief services and ambulances; Opening and operation of health facilities.
7. Culture & Recreation	Culture and artwork	Youth and sport activities; Leisure and recreational facilities; Libraries and museums; Conservation of cultural assets
8. Education		Pre-elementary school education centres; School buildings maintenance
9. Social Welfare	Social service assistance	Social and aid services

Scope of fiscal data: provincial special administrations, metropolitan municipalities, municipalities, local government unions, development agencies, youth and sports provincial administrations.

SNA 2008

Availability of fiscal data: Medium

Quality/reliability of fiscal data: High

GENERAL INTRODUCTION: Türkiye can be characterized as an OECD country with a centralised system of government. Subnational governments play a minor role in the provision of public services and investment and they depend heavily on central government funding. Different fiscal reforms, driven by territorial reforms, have changed the design of the intergovernmental fiscal system to increase subnational government revenues: in 2008 (Law 5779 on Allocations from Tax Revenues under the General Budget to Special Provincial Administrations and Municipalities) and in 2012 following the Local Government Act and Metropolitan Act (Act no. 6360). These recent changes aimed at the strengthening metropolitan municipalities, while clarifying their functions and reinforcing the financing framework and fiscal rules. However, they have also increased their dependence on intergovernmental transfers, and subnational government revenue remain limited compared to other OECD countries.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	842	3.0%	8.4%	100%
Inc. current expenditure	668	2.4%	7.4%	79.3%
Compensation of employees	172	0.6%	7.1%	20.5%
Intermediate consumption	389	1.4%	31.7%	46.2%
Social expenditure	37	0.1%	1.0%	4.4%
Subsidies and current transfers	31	0.1%	3.6%	3.7%
Financial charges	38	0.1%	4.2%	4.5%
Others	0	0.0%	0.0%	0.0%
Incl. capital expenditure	174	0.6%	16.1%	20.7%
Capital transfers	45	0.2%	69.2%	5.3%
Direct investment (or GFCF)	130	0.5%	12.8%	15.4%

EXPENDITURE: Subnational government spending ratios to GDP and general government expenditure in Türkiye are well below the average for OECD unitary countries (12.7% of GDP and 27.5% of public expenditure in 2020). Municipalities represent the lion’s share of subnational government expenditure (around 77.8%), especially due to the increasing share of metropolitan municipalities (which account for 37% of subnational government expenditure), whereas SPAs represent barely 6% of subnational government expenditure, and other local actors the remaining part (i.e., local government unions, development agencies, youth and sports provincial administrations). The share of subnational governments in public staff spending is particularly low: 7.1% compared to 41.4% in OECD unitary countries in 2020. Similarly, staff spending also accounts for a small share of subnational government expenditure, well below the OECD average for unitary countries (30.2% in 2020). This can be partly explained by the existence of spending limits for subnational governments: the Municipal Law caps the total annual staff expenditures of each municipality at 30% of the revaluated previous year’s revenues (40% for municipalities with less than 10 000 inhabitants).

DIRECT INVESTMENT: Subnational government investment in Türkiye plays a limited role in total public investment and GDP compared to the OECD averages for unitary countries (respectively 48.9% and 1.9% in 2020). However, investment accounted for a large share of subnational government expenditure in 2020, above the OECD average (14.8% for unitary countries). Metropolitan municipalities account for the main share of total subnational capital expenditure (45%, versus 26% for other municipalities and 10% for SPAs in 2020). Metropolitan municipalities are significant contributors to the economic growth of the country, through their large-scale investments in transport, tourism, environmental protection, healthcare, art, culture and sport.

Subnational governments primarily execute decisions made by the central government through the Presidency of Strategy and Budget, which considers regional dimensions while preparing the public investment programme. Funding for local investment projects is allocated from the central government through ILBANK, Türkiye’s development and investment bank. It has a major influence on municipal investments, a large share of which is targeted to water supply and sanitation (WSS).

With the metropolitan municipality reform, Investment Monitoring and Coordination Presidencies (IMCP) were established as deconcentrated entities to coordinate investment decisions in metropolitan municipal areas, alongside the 26 development agencies, which play an active role in the public investment decision-making process at local level and mobilising local stakeholders and resources.

The 11^th Development Plan (2019-2023) mentions, among its priorities, the need to introduce a new regulatory framework to provide a common basis for Public-Private Partnership projects (PPPs), and underlines the importance of reducing regional development disparities and untap regional development potentials.

Subnational government expenditure by functional classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure by economic function	842	3.0%	-	100%
1. General public services	356	1.3%	16.5%	42.3%
2. Defence	2	0.0%	0.3%	0.2%
3. Security and public order	40	0.1%	6.3%	4.8%
4. Economic affairs/transports	129	0.5%	9.4%	15.4%
5. Environmental protection	74	0.3%	91.2%	8.9%
6. Housing and community amenities	118	0.4%	57.0%	14.1%
7. Health	11	0.0%	0.7%	1.3%
8. Recreation, culture and religion	56	0.2%	27.2%	6.6%
9. Education	35	0.1%	3.5%	4.2%
10. Social protection	19	0.1%	0.5%	2.3%

The two most important subnational government expenditure items (excluding general public services) are economic affairs and transport, and housing and community amenities (mainly drinking water, housing and community development). They are followed by environmental protection, and recreation and culture. For the SPAs, general administrative services represent the bulk of their spending, followed by education and economic affairs. For municipalities (including metropolitan municipalities) the main budget items are economic affairs, housing and community amenities, and general administrative services. The shares of subnational governments in total public expenditure in social protection, health and defence are, on the other hand, very small.

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	926	3.3%	10.5%	100%
Tax revenue	97	0.3%	1.9%	10.4%
Grants and subsidies	696	2.5%	-	75.2%
Tariffs and fees	104	0.4%	-	11.3%
Income from assets	13	0.0%	-	1.4%
Other revenues	16	0.1%	-	1.8%

OVERALL DESCRIPTION: The subnational government financing system is dominated by grants and subsidies from the central government, which represent an increasing share of subnational government revenue (+5 percentage points between 2016 and 2020), well above the OECD average for unitary countries (53.3% in 2020). Since Law no. 5779 of 2008 went into effect, municipalities and SPAs receive a fixed share of the receipts of national taxes (personal income, corporation income and profits, and VAT), which are redistributed in the form of grants according to several criteria. Law no. 6360, effective since 2014, amended the Law no. 5779 and introduced major changes in the distribution of the different shares of general tax revenues going to different categories of subnational governments. The goal was to take into consideration the population of the new entities, including the metropolitan municipalities.

As a result, the share of tax revenue in subnational government revenue is particularly small (10.4% versus 35.4% on average in the OECD unitary countries). Municipalities are the only subnational government level able to perceive tax revenue, wehereas SPAs rely almost exclusively on grants and subsidies.

TAX REVENUE: Subnational government tax revenue accounted for 0.3% of GDP and 1.9% of public tax revenue in 2020, which is well below the OECD average for unitary countries (4.5% of GDP and 18.7% of public tax revenue). Local governments at the municipal level are the only ones to perceive tax revenues, which are exclusively own-source; yet they have little leeway over these revenue because tax rates are predefined at the central government level.

The primary municipal tax is the property tax on land and buildings (EmlakVergisi), paid by owners, whether or not the owner lives in the property. It provided around 65% of subnational government tax revenue and 6.7% of subnational government total revenue in 2020. Overall, revenue from this tax remain relatively low, amounting to 0.2% of GDP, well below the OECD average (1.0% of GDP in 2020). The recurrent property tax is calculated based on the land and building facilities and the size of the plot in square metres. Municipalities are responsible for collecting the tax and can set the rates within a 0.1% - 0.3% rang, subject to the approval of the Council of Ministers. The rates are applied twice for property that is located in Metropolitan Municipality areas, such as Istanbul.

Other local taxes include excise taxes such as the tax on electric and gas consumption (approximately 14% of subnational tax revenue), the environmental cleaning tax (4%), the advertisement tax (3%), entertainment tax, and insurance tax. The environmental cleaning tax is paid by owners or residents who use the property. It is included in the water bill of the property and is calculated on the basis of water consumption per cubic meter.

GRANTS AND SUBSIDIES: The major component of the intergovernmental transfer scheme is the system of national tax-sharing (including PIT, CIT and VAT), which represents around 70% of total central government transfers and 54% of total subnational government revenue. It consists mainly of formula-based block grants that are buoyant, predictable and, for a small share, of unconditional transfers. Subnational governments also receive capital grants for infrastructure and education services.

The revenue entitlements of SPAs and municipalities from the national budget were originally defined by the 2008 Law no. 5779. Major changes occurred in 2014 with Law no. 6360. As a result, municipalities became more reliant on central government transfers. According to the new tax-sharing scheme, of the total collection of the general budget tax revenues, 6% of national taxes are allocated to metropolitan municipalities, 4.5% to district municipalities (vs 2.5% before 2014), 1.5% to other municipalities (vs 2.85%) and 0.5% to SPAs (vs 1.15%). These funds are redistributed according to equalisation mechanisms based on various criteria, including population, economic development index as well as surface area, number of villages and rural population (for SPAs). Metropolitan municipalities have their own inter-metropolitan equalisation scheme.

Transfers are channelled to municipalities and SPAs through Ilbank, the Provinces Bank, except for metropolitan municipality transfers that are directly transferred to the metropolitan municipalities’ account by the Ministry of Finance. If municipalities default on their debt, the Provinces Bank may deduct a percentage of up to 40% from their transfer revenues (the decision is made by the Council of Ministers).

OTHER REVENUE: Subnational governments derive around 12% of their revenue from user charges and tariffs, which is above the OECD average for unitary countries (9.1% in 2020). They perceive user charges and fees in particular in the areas of sewerage, water, road construction and improvement, business license, and communal fees from Land Development Fees and Construction Permits. Subnational governments, in particular municipalities and metropolitan municipalities, also receive revenue from profits of municipality-owned corporations, rents and the sales of municipal assets.

Subnational government fiscal rules and debt
2020	Dollars PPP / inh.	% GDP	% general government debt	% SNG debt	% SNG financial debt
Total outstanding debt	1 015	3.6%	8.0%	100%	-
Financial debt	548	2.0%	4.7%	53.9%	100%
Currency and deposits	0	-	-	0.0%	0.0%
Bonds / debt securities	24	-	-	2.4%	4.4%
Loans	523	-	-	51.6%	95.6%
Insurance pensions	48	-	-	4.7%	-
Other accounts payable	420	-	-	41.4%	-

FISCAL RULES: Türkiye’s fiscal rules for subnational governments essentially concern expenditure limits and borrowing constraints, in the absence of a balanced-budget rule. The Public Financial Management and Control Law No. 5018 was adopted in 2003 to re-organise the public financial management and control system at the national level in line with international standards and EU practices. At the subnational level, oversight of subnational governments remains weak. The central government cannot impose sanctions on subnational governments in case of failure to adhere to fiscal rules. However, municipalities which exceed their debt or staff expenditure ceilings will not be granted permission to borrow or to hire new staff. There is a Fiscal Management and Control Centre Harmonisation Unit, and its monitoring function shall be strengthened in the future. In addition, the internal audit function within government will be strengthened with the goal of increasing public administrations’ level of compliance with Internal Auditing Standards.

DEBT: Subnational governments are allowed to borrow within the rules set by Law no. 4749 (regulation on public finance and debt management) to finance investment projects only (“golden rule”), and under the supervision of the central government (in the case of foreign borrowing). In addition, there is a number of borrowing limits and procedures according to Law no. 5393. In particular, domestic borrowing is limited to an amount of 10% of the previous year’s revenues. Total outstanding debt stock cannot exceed the revalued amount of the latest annual budget (1.5 times for metropolitan municipalities).

The level of subnational government debt is significantly below the OECD average for unitary countries (14.5% of GDP and 10.5% of public debt in 2020). Around 54% of the outstanding subnational debt is composed of financial debt, while other accounts payable (commercial debt, arrears) amounted to 41% and insurance pensions to 4.7%. Financial debt is made up primarily of loans, although subnational governments have started to issue bonds (4.4% of subnational government financial debt in 2020). Most metropolitan municipalities are rated by international rating agencies, and they own most of the subnational government debt, due to the infrastructure investment needs of urban jurisdictions. Ilbank provides credits to municipalities and acts as an agent in the administration of municipalities’ external loans. It establishes the creditworthiness and therefore the acceptable debt level of all local governments.

TERRITORIAL MANAGEMENT OF THE CRISIS: Territorial management of COVID-19 in Türkiye occurred mainly between the central government and its deconcentrated entities, in particular through the Provincial Health Directorates, which are accountable to the provincial governors. To respond to the differentiated impact of the crisis, the central government used a four-tier color-coded system for classifying individual provinces and municipalities based on local COVID-19 transmission risk, and imposing restrictions accordingly (ranging from "blue" (low), "yellow" (medium), "orange" (high), to "red" (very high)). The national government has also empowered provincial authorities to implement local quarantines and curfews based on epidemiological data.

The Union of Municipalities of Türkiye (UMT) took part in the coordination meetings held at the national level to counter the pandemic. UMT also organised a series of nationwide conferences in 2020 and 2021 (called “Post-Pandemic Regional Development Meetings”) in order to emphasize the importance of local governments in national development, and collectively draft a Local Development Vision Document. Marmara Municipalities Union (MMU) disseminated information on COVID-19 measures taken by municipalities through its official website and shared local best practices with several international networks and institutions. In particular, MMU published a report which identifies COVID-19 communication patterns of municipalities in Marmara Region in Turkey in order to shed light on crisis communication at the local level, an important dimension of crisis management.

Development agencies have a played an important role in the management of the crisis, by implementing the "COVID-19 Struggle and Resilience Financial Support Program” (resourced with approximately EUR 30 million). They supported projects focused on: (i) containing and mitigating the spread of the virus; (ii) emergency preparedness and public health responses; (iii) reducing the impact the epidemic on the country and regional economy. Agencies also helped to identify the social and economic impact of the epidemic in the provinces and provided strategies for areas where intervention was required.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: Subnational governments have taken a number of emergency measures to support businesses and households throughout the crisis. Metropolitan and provincial municipalities were in charge of communication on health measures with the general public, and setting up call centres to answer to citizens’ questions and provide psychological support, especially for the ones with disabilities and their families who need special support. Metropolitan municipalities provided diverse types of emergency measures to support their population based on their economic structure: Gaziantep supported agricultural production in local level, and focused on awareness campaigns dedicated to the refugee population; İzmir introduced “Crisis Municipalism” directives to fight against the pandemic, including the provision of food and accommodation to healthcare professionals, and the organisation of virtual events for citizens; some municipalities also transferred some public services online, such as online libraries, or mobile one-stop-shops. To support the most vulnerable member of their communities, some municipalities set up exemptions on public housing rental fees and delivered food and medical supplies for the elderly. Finally, several municipalities launched local schemes permitting to cancel public utility (water and natural gas) and grocery debts of insolvent households.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Health and social protection functions are mainly centralised in Türkiye, and therefore most of the extra costs incurred by the COVID-19 crisis were borne by the central government and deconcentrated levels of administration. A the subnational level, the level of subnational government expenditure has decreased between 2019 and 2020 (-10% in real terms), driven mainly by a decrease in direct investment (-16%), due to the postponement of investment projects. This reduction is also visible in the amount of subnational government expenditure in the area of housing and community amenities, which decreased by 41% over this period. On the other hand, Turkish subnational governments have spent more in 2020 compared to 2019 in the field of recreation, culture and religion.

On the revenue side, subnational government revenue has remained stable. The share of capital grants in total grants has decreased as compared with current grants. Due to the tight fiscal rules and low levels of subnational government debt, subnational debt has remained stable throughout the first year of the COVID-19 crisis. Although metropolitan municipalities have increased their debt level over 2020-21, in order to be able to pursue investment plans in a tight fiscal context, total subnational government debt remains low over the period.

ECONOMIC AND SOCIAL STIMULUS PLANS: Türkiye’s New Economic Programme 2021-2023, which was elaborated centrally and published at the end of September 2020, focuses on macroeconomic stability, in a context of currency crisis. It aims to attract more foreign direct investment and to enhance environmental sustainability - specifically by converging with the European Union’s Green Deal. The government announced that it plans to implement policies for economic recovery during the post-pandemic period to support the labour market.

In addition, the 2022 National Investment Program keeps a strong focus on the main priority sectors of the 11^th National Development Plan: transport and communication, education, energy, agriculture and health, with a focus on service quality and reduction of regional disparities.